The tears and choked sobs when Sonia Sotomayor accepted President Obama’s nomination on Tuesday told another story.

Packed into the room along with Sotomayor’s family, friends and colleagues were representatives of Jewish groups that have consulted with the White House about prospective replacements for David Souter.

The story of her life – the daughter of a Puerto Rican single mother from the Bronx, NY, whose ambitions knew no bounds – resounded with a community that has made the story of immigrant triumph over struggle a template of Jewish American success.

“It was impossible not to moved by her personal story,” said Mark Pelavin, the associate director of the Reform movement’s Religious Action Center. “To see her mother sitting there and think about what this says about her and her country – the combination of someone who grew up in a housing project, who has been on the bench for a long time, but who has been a prosecutor as well, that combination is very powerful.”

“It was thrilling,” said Sammie Moshenberg, the Washington director of the National Council of Jewish Women.

It doesn’t hurt that Sotomayor, 54, is a poster child for strong Jewish-Hispanic relations. In 1986, when she was in private legal practice, she joined one of the first young leadership tours of Israel sponsored by Project Interchange, which is affiliated with the American Jewish Committee.

Sotomayor so enjoyed the country – its immigrant culture, its popular music influenced heavily by Jewish immigrants from Argentina and Brazil – that she made a return visit in 1996 when she was a federal judge, and recently joined a Project Interchange US-Israel forum on immigration. In the process, she formed a lifelong friendship with Project Interchange founder Debbie Berger and her husband, Paul, who attended her swearing-in as a Manhattan appeals court judge in 1998.

“She enjoyed Israel not just from an intellectual perspective, she liked the music and the people,” Paul Berger told JTA.

Richard Foltin, the legislative director for the AJC, said her background naturally played a role in how the Jewish community would welcome her.

“We must recognize the significance of the third woman and first Hispanic on the court,” he said. “And there’s no question of her impressive qualifications.”

Sotomayor would come to the Supreme Court with one of the longest bench careers in its history, having handed down or joined 3,000 decisions in 18 years as a federal and appeals court judge. That’s a lot to read through and accounted for a degree of hesitancy from Jewish groups that were enthused about her life story but just getting to know her judicial record.

“I’ve got a bunch of opinions in my briefcase and it’s time to start reading,” Pelavin said.

The National Council of Jewish Women — one of the few Jewish groups that expresses an opinion on judicial candidates — has yet to announce where it stands. Whatever the case, said Nancy Ratzan, the NCJW’s president, the organization would dedicate itself to ensuring that Sotomayor receives a fair hearing.

“Our 90,000 followers will be focused on making sure it’s a fair and prompt process that focuses on her record,” she said.

NCJW and the Religious Action Center will canvass members for appropriate questions for Sotomayor during the confirmation process; the questions will be relayed to the US Senate Judicary Committee.

Leaders of the Anti-Defamation League issued a statement calling for a process that is conducted “professionally, and with civility and respect,” and praised the pick while stopping short of an official endorsement.

“We applaud President Obama for having selected this noted jurist to be the Court’s first Hispanic and third woman Justice,” the ADL leaders stated. “If confirmed, she will undoubtedly bring an important new perspective to the work of the Court.”

Even the Orthodox Union, which tends to stake our more conservative ground than other Jewish organizations on church-state issues, spoke positively about Sotomayor, citing several religious freedom-related cases.

In a 1993 case, she upheld the constitutional right of a rabbi in White Plains, NY, to display a menorah in a city park. In two other cases, in 1994 and 2003, Sotomayor upheld prisoners’ religious rights even though the practices in question did not conform with mainstream beliefs. And in 2006, she ruled that allowing federal age discrimination statutes to apply to a 70-year-old minister dismissed by the Methodist church would constitute unwarranted government interference in church affairs.

Those decisions, OU said, were “very encouranging.”

Marc Stern, the legal counsel for the American Jewish Congress, predicted that Sotomayor’s long bench experience ultimately will be a plus. More time on the bench shaping reasoned opinions made her less of a target than other nominees – like Lani Gunier, Robert Bork and Samuel Alito – whose years pushing intellectual boundaries in the halls of academe handed fodder to opponents seeking controversial statements.

Additionally, the 2nd Circuit of Appeals – based in Manhattan and covering New York, Connecticut and Vermont – deals with cases emerging from courts and legislatures that already trend liberal. That means it is less likely to address issues such as abortion and discrimination that often exercise Jewish groups.

“There’s no track record that anyone can point to,” Stern said, referring to such hot-button issues. “There’s not likely going to be a whole lot there as a smoking gun.”

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Obama Supreme Court pick Sonia Sotomayor believes that suspects captured on the battlefield must receive all rights afforded to American citizens under the Constitution. That’s the good news. Now here’s the bad. She thinks American citizens don’t have the right to own firearms.

As a graduate student at Princeton University, Sotomayor wrote a these entitled “Deadly Obsession: American Gun Culture.” In the text, Sotomayor makes the argument that the Second Amendment does not actually afford individual citizens the right to bear arms. She believes only the military has this right. According to Sotomayor, it has been illegal for individuals to own firearms since the passing of the Bill of Rights.

In 2004, in U.S. v. Sanchez-Villar, a three-judge panel that included Sotomayor wrote that “the right to possess a gun is clearly not a fundamental right.” In another case, Sotomayor ruled that it is illegal for citizens to keep nunchakus in their homes.

Alan Gottlieb, chairman of the Citizens Committee for the Right to Keep and Bear Arms, said on Wednesday that “Judge Sotomayor’s position on the Second Amendment is a clear signal that Mr. Obama’s claim that he supports gun rights is nothing but lip service,” reports CBS News.

“Judge Sotomayor’s record suggests hostility, rather than empathy, for the tens of millions of Americans who exercise their right to keep and bear arms,” said Dave Kopel of the Independence Institute.

Ken Blackwell of the Family Research Council believes her nomination amounts to “a declaration of war against America’s gun owners.”

Earlier this year, Sotomayor ruled that states do not have to obey the Second Amendment’s commandment that the right to keep and bear arms shall not be infringed, according to CNSNews. In Maloney v. Cuomo, Sotomayor signed an opinion of the U.S. Court of Appeals for the Second Circuit that said the Second Amendment does not protect individuals from having their right to keep and bear arms restricted by state governments.

Sonia Sotomayor would be a perfect Supreme Court justice for the Obama administration. Obama the supposed constitutional scholar is a notorious gun-grabber, although the corporate media refuses to underscore this fact. He endorsed the unconstitutional Illinois gun ban. In classic doublethink fashion, he has declared support for the Second Amendment in principle but backed local gun bans. Obama wants to ban “all forms” of semi-autos. But it is not simply semi-automatics — he would even ban most common rimfire target pistols, including those used in Olympic competition. For more on Obama’s gun-grabbing philosophy, see Barak Obama’s Gun Control Positions.

Many Americans understand Obama wants to outlaw guns and in response they are purchasing guns and ammo in record numbers. “Gun sales are on the rise across the U.S. and many dealers are having trouble keeping guns and ammunition in stock. Sales of guns moved sharply upward last November, the same month voters chose a new president,” reports VOA News.

A growing number of states understand the federal government is gearing up to not only outlaw firearms and trash the Second Amendment, but possibly confiscate them as well.

For instance, Tennessee governor Phil Bredesen has promised to sign a bill today making it legal to possess a firearm during martial law. “Sponsors say martial rule is the same as martial law at the federal level. They say the law is necessary after law enforcement in New Orleans went door to door seizing weapons in the aftermath of Hurricane Katrina,” reports the Associated Press.

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This son of a bitch needs to be HUNG. He and the majority of dumbass Republican Neo Con’s in the video are why I left the Republican Party and joined the Constitution Party. If you wont take up arms at least switch parties, these assholes have betrayed us for years and we just keep voting them in because they aren’t quite as liberal as the deomcrats. This is a flawed strategy that has ruined our country.

“Ron Paul is not the leader of this party,” Graham said, prompting a few jeers. Some people yelled, “Yes, he is!”

“I’m not going to give this party over to people who can’t win,” Graham finished, drawing most of the crowd to its feet.

This video is from YouTube, broadcast May 16, 2009.

Update: Brian, the guy who had the balls to tell Lindsey Graham he was a hypocrite to his face has given me the link to his video. You can watch it below. I hope others will follow Brian and stand up to these Neo Con’s who have sold us out. Don’t let them continue spewing BS call them out for what they are!

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“I cannot teach you violence, as I do not myself believe in it. I can only teach you not to bow your heads before any one even at the cost of your life.”

~ Mahatma Gandhi

I often get mail from readers inquiring on what to do to advance the cause of secession in their respective locales. So I’d like to discuss a few ideas on how it has worked in the past and how it may work in the future. I would first dispose of the canard that it is traitorous or unpatriotic to consider this. Do you suppose our rulers in DC abide by the rule of law, see the Constitution (I prefer the DI) as a bedrock document and seek to respect the real diversity in America (not the silly race, class & gender motif)? That diversity is the vast gulf in tolerance for levels of government as opposed to governance. Government is the command and control apparatus to manipulate people through coercion and violence. The distinction is that governance can occur in a minarchist or stateless realm because it runs the gamut from forms of external control to the personal controls of one’s own nature and relationship in society. Positive self-governance is the ability not only to do right by yourself but use your self-interest to serve others e.g., a business or voluntary work in a community and do them no harm. You have to ask whether your own philosophical ideas emanate from law or party; from conviction or the desire to get ahead at other people’s expense. You have to pry out the deeper recesses of who you are to divine what your motivations are in your community. If you conclude that in order for you to get ahead in life, you must use the vicious power of government to achieve this, secession may not fit you. The new regime in town will see that your needs are answered…for a while. Until they run out of money or create a state so suffocating that 1984 looks like a resort lifestyle.

The first task is to educate yourself on the ideas that would inspire such radical measures as secession. From whence does your conviction come? In a previous essay, I recommended a number of books on the subject. I would also add Thomas Naylor’s thin tome, Secession, as a great primer on the whole notion. There are a rather small number of books that deal directly with the secession issue. Yet, if we look at the vast number of books published since 1750 which deal with the precursors and history of both the First (1775–83) and Second (1860–65) American Revolutions the books start to increase tremendously which tangentially or directly deal with the notion.

We, therefore, the representatives of the United States of America, in General Congress, assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the name, and by the authority of the good people of these colonies, solemnly publish and declare, that these united colonies are, and of right ought to be free and independent states; that they are absolved from all allegiance to the British Crown, and that all political connection between them and the state of Great Britain, is and ought to be totally dissolved; and that as free and independent states, they have full power to levey war, conclude peace, contract alliances, establish commerce, and to do all other acts and things which independent states may of right do. And for the support of this declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our lives, our fortunes and our sacred honor.

We were not asking for a Declaration of Dependence wishing to increase the size and weight of the British yoke, we were putting a petition to the world that we would no longer be shackled like draft animals to a system of government that had become overbearing, tyrannical and cruel in the violence it visited on men who wished to be at the helm of their own destinies.

The Constitution was then penned and approved but it left plenty to be desired in a Founding document. Those who actively engage in Constitution worship may want to turn away from the remainder of this paragraph. The Constitutional Convention was a political coup held in secret behind closed doors. The delegates were sent to amend the Articles of Confederation, not abolish them. The resulting document so terrified the Anti-Federalists that they immediately pressed for the Bill of Rights to put the brakes on what they perceived to be a pernicious concentration of power in the central government. Patrick Henry at the time referred to the Federalists as Consolidationists who wished to turn the states into mere administrative departments of the central government. Alexander Hamilton had managed to consign liberty and freedom to the dustbin of history as soon as the ink was drying on the new documents. So a careful consideration of secession should not be restricted to the primary and secondary source documents for the Constitution but all the literature and actions which took place prior to and after its adoption.

I have mentioned before that a mastery of the logic and rhetoric of the Anti-Federalists is powerful medicine in the coming conflicts. They speak eloquently to the decentralist and devolutionist impulses. I especially enjoy the acid-tongued Brutus.

So how does the American central government feel about secession? They like it as long as it is happening to other nations. The US State Department is now the champion of a two-state solution in Israel and Palestine and the American government was not shy about the applause it offered the fifteen states that calved from the moribund USSR a generation ago or calls to free Tibet from Chinese occupation but the American state is not at all thrilled at the prospect of its own partition and break-up in the near future. Yet the US State Department has not shied from its positions on other states’ right to secede:

“The Secretary and other members of the Administration have expressed concern to Chinese officials that the anti-secession law may be counterproductive”…

Imagine if the Soviet Union had collapsed in 1989–91 and these united States insisted that all fifteen of the states that fell away from and seceded from the USSR had to stay or else. Yet the American government insists that Kosovo secede from Yugoslavia proper protected under NATO’s skirts but South Ossetia better not secede from the American-Israeli satellite of Russian Georgia.

Thomas Franck, one of the five international law experts asked by the Canadian government to consider certain issues regarding a hypothesized secession of Quebec, wrote that:

“It cannot seriously be argued today that international law prohibits secession. It cannot seriously be denied that international law permits secession. There is a privilege of secession recognized in international law and the law imposes no duty on any people not to secede. While international law does not foreclose on the possibility of secession, it does provide a framework within which certain secessions are favored or disfavored, depending on the facts. The key is to assess whether or not Kosovo meets the criteria for the legal privilege of secession.”

A privilege granted by whom? So it appears our rulers are quite conflicted when it comes to the recognition of secession on the world stage. We need to leverage this schizophrenia.

Remember the golden rule when it comes to successful resistance, rebellion and secession: grievances are exploited whether real or perceived. Every state in the increasingly reluctant Union has their own respective beefs with the central government ranging from taxation to the environment to energy policy. In your state or region, the key to successful monkey-wrenching of the system is to start small and witness to friends, family and neighbors of the injustices and inequities you feel the denizens of Mordor are doing to you and yours where you live. For the Austrians among you, witty explanations of the evils of central planning and the ills of government interference in the economy through taxation and regulation will yield great benefits for the right audience. It is your job to awaken folks from their collectivist fever-dreams.

Taxes too high? US Forest Circus wolf reintroduction programs reducing your elk populations? Local timber industry destroyed due to the EPA? Agricultural subsidies destroying farm yields and family farms through perverse pricing schemes? Helium reserves for WWI dirigibles? Insolvency of the Socialist Security System? The list for agitation and substantive reasons to divorce the DC Mob are too numerous to list and I leave it to your imagination. The point is that the nurturing of grievances is an important step in shaping and influencing the way people think in your community. Essentially, no one knows more about your neighborhood and environs than you and the potentates in DC are in this case the ultimate know-nothings. Leverage this cognitive dissonance to your advantage.

Think about the Gandhian-style non-compliance which occurred at Jarbridge, NV in 2000 when a Federal agency tried to ply their mischief. It apparently got to where Federal employees were denied victuals and lodging in local towns. Good old-fashioned shaming and shunning.

By the way, writing letters to your Feral (sic) Congress-critters to beg for the Ninth and Tenth Amendments of the Bill of Rights (among others) to be recognized is a waste of time. They will not yield the benefits they reap as rulers in their nests in DC. Something happens when they are there for more than a year and you will never get the smell out. They will ignore you or worse. Ignore them.

If you see fit to organize local Committees of Correspondence and Safety as our First American Revolutionary forebears did, modern communication techniques and sousveillance will make it very interesting indeed.

Local action is required for local results. I share with Lew Rockwell an increasing skepticism of any political action having a meritorious result in the causes of freedom and liberty but you must take your own counsel.

Isn’t secession the ultimate vote in a supposed democracy?

“They can jail us. They can shoot us. They can even conscript us. They can use us as cannon fodder in the sod. But – But we have a weapon more powerful than any in the whole arsenal of their British Empire – and that weapon is our refusal. Our refusal to bow to any order but our own, any institution but our own.

Our friends in the Royal Irish Constabulary would like to shut me up. Oh yes, jail me again, shoot me, who knows? And I’d like you to send them a message. If they shut me up, who’ll take my place?”

A growing number of lawsuits claim Obama’s dual citizenship disqualified him from serving as President, according to a report published by the Associated Press (AP) May 12.

In a move certain to fuel the debate over Obama’s qualifications for the presidency, the group — Americans for Freedom of Information — has released copies of President Obama’s college transcripts from Occidental College.

The transcript indicates that Obama, under the name Barry Soetoro, received financial aid as a foreign student from Indonesia as an undergraduate at the school.

The transcript was released by Occidental College in compliance with a court order in a suit brought by the group in the Superior Court of California.

The transcript shows that Obama (Soetoro) applied for financial aid and was awarded a fellowship for foreign students from the Fulbright Foundation Scholarship program.

To qualify for the scholarship, a student must claim foreign citizenship.

“This document provides the smoking gun that many of Obama’s detractors have been seeking,” according to the AP report.

The news has created a firestorm at the White House as the release casts increasing doubt about Obama’s legitimacy and qualifactions to serve as President.

When reached for comment in London, where he has been in meetings with British Prime Minister Gordon Brown, Obama smiled, but refused comment on the issue, AP reported.

Meanwhile, White House press secretary Robert Gibbs scoffed at the report, stating that this was obviously another attempt by a right-wing conservative group to discredit the President and undermine the administration’s efforts to move the United States in a new direction. (The direction is a Marxist State! –Redistribution of Income)

Britain’s Daily Mail has also carried the story in a front-page article titled, “Obama Eligibililty Questioned,” leading some to speculate that the story may overshadow economic issues on Obama’s first official visit to the United Kingdom.

In a related matter, under growing pressure from several groups, U.S. Supreme Court Justice Antonin Scalia announced that the highest court in the l and agreed May 12 to hear arguments concerning Obama’s legal eligibility to serve as President in a case brought by Leo Donofrio of New Jersey.

This gutsy Jersey guy comes from a State that supported, endorsed and campaigned for Obama last year. New Jersey is a deep blue Democrat State, and the State with the highest taxes in the nation.

Gary Kreep of the United States Justice Foundation has released the results of their investigation of Obama’s campaign spending. This study estimates Obama has spent upwards of $950,000 in campaign funds in the past year with 11 law firms in 12 states for legal resources to block disclosure of any of his personal records.

Obama ultimately raised $866 million dollars in his bid for the Presidency, the highest ever spent by a presidential candidate.

As an investigative columnist, I would like to know where that kind of money came from. The United States? The Mid-East? The Far East? Africa? Europe?

Obama refuses to release the names of his campaign donors.His opponent in the presidential race, U.S. Senator John McCain, a Republican, released his list of donors.

Obama outspent McCain 8 to 1 in money raised for Obama’s campaign.

What most voters and taxpayers don’t know, or even care about, is that Obama launched his presidential campaign in Chicago, the most corrupt city in America.

From this corrupt, polluted swamp emerged Barack Hussein Obama, who has two names and two citizenships.

During his campaign, Obama declared that he was “A Citizen of the World” — not “A Citizen of America.”

Now he sits in the Oval Office of the White House, spending trillions of borrowed money to re-make America into a fully, Far Left Socialist State.

And he’s using your tax dollars to bankrupt what was once the greatest country in the world, known for its Freedoms, Liberties, and Opportunities.

No more, folks! We’re on the way to bankruptcy, and, ultimately, poverty for the common maljority — some 290 million people.

Already, there are some 10 million people in the USA looking for jobs they can’t find.

Add to this a long and punishing recession that is sliding into a real Depression like the “Great Depression” of the 1930s.

A historic note: Liberal Democrat President Franklin Delano Roosevelt did not end the Depression” with his stimulus “New Deal” package. A crazed dictator named Adolph Hitler brought an end to the Depression by triggering World War II.

And “That’s the rest of the story” you’ll never read in the Far Left liberal media, which is fully responsible for the election of Barack Hussein Obama.

PS/You also might want to go to Politico.com and read all four parts of Michelle Obama’s thesis from Princeton University, before she went to Harvard Law School, where she met her husband. Yes, we have two lawyers in the White House — just like Bill and Hillary Cllinton.

So much for America’s corrupt political system!

“Published originally at EtherZone.com : republication allowed with this notice and hyperlink intact.”

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Senator Kirsten Gillibrand, Democrat and member of the so-called Blue Dog Coalition, plans to introduce an assault weapons ban this week. Gillibrand, the junior senator from New York, was at one time highly rated by the NRA for her advocacy of the Second Amendment.

Newsday claims Gillibrand has “undergone a transformation” over the last three months and has moved away from “her House record that won the NRA’s top rating while remaining a supporter of Second Amendment rights to gun ownership.” Since her Senate appointment, she has “passed just about every test on guns set by Rep. Carolyn McCarthy,” who reintroduced a bill closing the so-called gun-show loophole at a news conference last week.

It appears likely Ms. Gillibrand was a gun-grabber all along and used the Second Amendment as an election ploy. Polls indicate a large percentage of voters strongly support the Second Amendment.

McCarthy’s bill, H.R. 6676, would utilize the National Instant Criminal Background Check System for background checks on all gun store employees and dealers. In addition to H.R. 6676, three other bills have been offered including laws that would make it illegal for known or suspected terrorists to buy guns.

As reported by Infowars last week, the House is currently working on H.R. 2159, The Denying Firearms and Explosives to Dangerous Terrorists Act of 2009, sponsored by Rep. Peter King of New York. The bill would “increase public safety by permitting the Attorney General to deny the transfer of a firearm or the issuance of firearms or explosives licenses to a known or suspected dangerous terrorist.”

Larry Pratt, executive director of Gun Owners of America, told WorldNetDaily the bill will likely be used in junction with the DHS “Rightwing Extremism” report that characterizes advocates of the Second Amendment and others as terrorists. “By those standards, I’m one of [DHS Secretary] Janet Napolitano’s terrorists,” Pratt said. “This bill would enable the attorney general to put all of the people who voted against Obama on no-gun lists, because according to the DHS, they’re all potential terrorists.”

Senator Gillibrand is working closely with gun-grabbing organizations, including New Yorkers Against Gun Violence and the Brady Campaign, according to Matt Canter, Gillibrand’s spokesman. New York City Police Commissioner Ray Kelly and others are working with Gillibrand on “anti-trafficking legislation to stop the flow of illegal guns,” Canter told Newsday.

The Obama administration recently attempted to link the right to own firearms to drug cartel violence in Mexico. Secretary of State Hillary Clinton and other administration officials have said 90 percent of the weapons used to commit crimes in Mexico come from the United States. In fact, only 17 percent of guns found at Mexican crime scenes have been traced to the U.S. Statistics reveal that most of the guns flowing into Mexico come from the black market, Russian crime organizations, South America, Asia, Guatemala, and the Mexican Army.

Soon after his shoo-in confirmation, Attorney General Eric Holder revived the assault weapons ban debate. Responding to a reporter’s question on weapons’ regulations, Holder said, “Well, as President Obama indicated during the campaign, there are just a few gun-related changes that we would like to make, and among them would be to reinstitute the ban on the sale of assault weapons. I think that will have a positive impact in Mexico, at a minimum.” Holder did not provide details on when legislation would be presented to Congress.

Democrats are reluctant to make additional attacks against the Second Amendment. In 1994, the issue was instrumental in handing over control of Congress to the Republicans. Earlier this year, the Democratic-led Senate dealt a body blow to the gun control movement, when 22 Senate Democrats, led by Majority Leader Harry Reid, D-Nev., joined 40 Republicans to shelve firearms restrictions in the nation’s capital.

Democrats fearful of backlash have told the Obama administration they would “actively oppose” any renewal of the assault weapons ban. Democrat senators Jon Tester and Max Baucus warned they would “strongly oppose any legislation that will infringe upon the rights of individual gun owners.”

Democrats, however, are biding their time. Veteran gun-grabber Sen. Dianne Feinstein, a California Democrat, author of the 1994 assault weapons ban, told CBS’ “60 Minutes” on April 12 that she has no intention of reintroducing the assault weapons ban at this time. “I’ll pick the time and the place, no question about it,” she said, that is to say when the opportunistic introduction of such legislation is politically expedient and will not damage her party.

Government propaganda and exploitation of recent high profile “gun violence” stories by the corporate media have not turned the public against the Second Amendment. “Recent polls show shrinking support for new gun control measures and strong public sentiment for enforcing existing laws instead. So strong is the shift in public opinion that a proposed assault-weapons ban — once backed by three in four Americans — now rates barely one in two,” reports the Houston Chronicle.

An April poll by NBC News and the Wall Street Journal found that support for curbing the sale of assault weapons and semiautomatic rifles has dropped from 75 percent in 1991 to 53 percent today.

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[Note: Presentation to the 2003 Spring Conference, “Beyond the Storm,” hosted by Sage Capital Management, Inc., Houston, Texas, March 12, 2003. The views expressed are mine alone, and not those of Sage Capital.]

Good afternoon. I’m delighted to be here today. It’s an honor to speak to a gathering of smart and successful people. And it’s a privilege to share a podium with some of the best living minds in economics. I’d like to thank my friend Tony Deden for inviting me to take part.

Tony has asked me to share some of my views on gold. He tells me his accounts have gold in their portfolios. Now, unless you’ve somehow managed to shut the financial media out of your life, you may wonder what it’s doing there. How does a volatile commodity square with a sober emphasis on capital preservation?

The Three Propositions

Allow me to present what might be called the three articles of the gold bug creed:

First, gold is money. It always has been. It’s the clear choice of free markets throughout recorded history.

Second, what we call money today is not money at all. It’s just a rash experiment in credit expansion that has spun totally out of control. Like all such experiments before it, this one will end in tears.

Third, following the failure of the current monetary system, gold will once again play its historic role as the anchor of a successor system. The market will demand it, and the authorities will have no choice but to let the market have its way.

The presence of gold in your portfolios signifies that you will emerge from the collapse of this experiment with your capital intact. Indeed, you may clean up in a radically altered landscape. Kind of the ultimate good news/ bad news scenario.

Now with your indulgence, I’ll take you on a little historical excursion as I provide some support for these wild assertions.

In Search of Money

Why is gold money? Several years ago, at a dinner party in New York, I was discussing this very topic with a smart and senior portfolio manager at Salomon Brothers. At one point, he grabbed an empty beer bottle, held it up and asked me why gold was money, any more than that bottle. This pretty well captured the mainstream skepticism toward gold. So it seems like a pretty good starting point.

My friend’s question begged a threshold question: what is money? The best definition I know of comes from Carl Menger, a founder of the Austrian school of economics. Money, said Menger, is a medium of exchange. It is something that men acquire as a means of acquiring something else. It enables people to avoid the inconvenience of direct exchange, or barter, and engage in a more convenient indirect exchange. Money, said Menger, is a social institution, the unintended result, the unplanned outcome, of individual efforts of members of a society.1

Permanent, Natural Money

So why is gold money? The short answer is because the market says so. Over the course of thousands of years of trial and error, consenting adults engaging in commercial acts settled on it to perform the function of money. Why did people choose gold? Because, Menger observed, over time it was identified as having the greatest liquidity – the lowest bid-offer spread – of all possible contenders. A person bringing a relatively illiquid item to market could swap it for gold, secure in the knowledge that he could later use that gold to get whatever he wanted.2

[Source: www.vosper4coins.co.uk]

Gold has universal appeal and acceptability. If you were to send off to central casting for the perfect substance to serve as money, gold is what you’d get. Its many attributes include the following:

Rarity. Gold constitutes only about 5 parts per billion of the earth’s crust. It is also difficult, dangerous and expensive to extract. Anyone who’s actually been down a mineshaft, as Tony and I have, knows just how precious a metal it is.

Indestructibility. Gold doesn’t tarnish or decay.

Density. Gold doesn’t take up much space. All the gold mined in human history amounts to about 130 thousand metric tons, an amount which would only fill about a 100 foot cube if gathered in one place.

Malleability and divisibility. You can stretch it, pound it thin, and divide it into multiple tiny amounts.

Controlled expansion. This is the most important quality, as we’ll see. Gold can only be produced in limited quantities, currently at a peak rate of about 2,500 metric tons, or roughly 2%, each year. No matter what wars or social programs urgently need funding.

So the answer to my friend’s question is that gold is money, over brown glass and anything else he might have brandished, because people have sensibly chosen to use it as such over a very long period of time.

The Gold Standard

Gold as money reached its fullest flowering under the gold standard of the 19th century. Off and on over a period of about 100 years, the leading countries of the West plus many others operated under this remarkable international monetary system.

It emerged by accident, as a result of the choices of individuals engaged in commerce, not as the result of government decree. In the words of a modern scoffer, “Nobody invented [it], no grand plan was ever devised, no one ever wrote a rule book on the necessary codes of behavior.”3

Under the gold standard, “currencies were just names for particular weights of gold.”4 For example, the Pound Sterling was defined as just over 113 grains of gold; the US dollar was defined as 23.22 grains of gold. Each currency could be converted into its underlying gold weight by any holder at any time. The gold standard exerted a discipline on governments that seems incredible today. Trade and budget imbalances quickly resulted in a self-correcting draining away of gold from a sinning country’s coffers, as foreign holders of its currency cashed in their chips, prompting a deflationary shrinkage of the domestic money supply.

The discipline of the gold standard brought about the closest approximation to the ideal of the limited state that we have ever known. The late economist Melchior Palyi put it thus:

It protected the individual against arbitrary measures of the government by offering a convenient hedge against ‘confiscatory’ taxation, as well as against the depreciation or devaluation of the currency. It was an instrument of ‘mobility’ within and beyond national borders. Above all, it raised a mighty barrier against authoritarian interferences with the economic process.5

Ludwig Von Mises, the towering genius of the Austrian school, called it “the world standard of the age of capitalism, increasing welfare, liberty, and democracy, both political and economic.”6 The gold standard, he said, “is certainly not a perfect or ideal standard. There is no such thing as perfection in human things. But nobody is in a position to tell us how something more satisfactory could be put in place of the gold standard.”7

So what happened to it?

Spoils of War

The big picture answer is that it was a casualty of World War I. In addition to destroying the lives of millions of individuals through incredible stupidity, butchery and waste, the war destroyed the entire international economic, legal and monetary order.

The major belligerents suspended convertibility of their currencies into gold shortly after the war started. This was an essential step in making a long and costly war possible. Had they stayed on the gold standard, the war would have had to end in a matter of weeks.

When peace was finally restored some four years later, an evil genie had been let out of the bottle. The gold standard was now seen as just another manipulable institution. It had been set aside in furtherance of war; why not set it aside in furtherance of peacetime prosperity?

The war had brought about a change in people’s perceptions of the proper role of the state. After the years of sacrifice and empty promises, they wanted a better life, and looked to the state to provide it. In the monetary sphere, this took the form of what Palyi called “an emotional and utopian attitude toward money and credit,” the open embrace of inflationism.8 Politicians chose inflation over liquidation of uneconomic productive capacity that had sprouted up to feed the war effort. Rather than return to the gold standard, the leading nations adopted an inflationary compromise, a so-called gold exchange standard that preserved the old form but gutted its substance.

Rogues Gallery

But that’s just the big picture answer. Individual human actors make history, just as they make markets. And in the case of the gold standard, I believe its death is better understood as murder at the hand of an assassin, namely, one John Maynard Keynes.

Lord Keynes, along with Vladimir Lenin, pictured at right, ranks among the most destructive forces unleashed by World War I. Keynes was a Fabian socialist who provided intellectual cover for inflationism. He was more subtle than Lenin, more a termite than a thug. He’s best known for authoring bogus economic theories that turned classical economics on its head, undermined Western values and philosophy, and enslave us to this day. But he was also a devastatingly effective participant in the monetary debates that followed the Armistice. It was Keynes who famously called the gold standard a “barbarous relic.” In the words of a biographer, Keynes “killed it almost singlehanded.”9

Brown Glass and Green Paper

So much for the first proposition, that gold is money. The second is that our money is not. How can I say that, and what do I mean?

Let’s go back to my friend with his beer bottle. So far I’ve only addressed the explicit part of his question. But there was also an implicit part, which was: what is to keep us from deciding nevertheless to use brown glass as money? Where does it say we have to be rational? Why can’t we override the market’s choice and write a law saying brown glass is money, and prohibit anyone other than a council of wizards from making brown glass? Why not, indeed. This is in fact what our government has done, except it picked green paper — or rather digital entries symbolizing green paper — instead of brown glass.

Our monetary system is not based on money at all. It’s based on credit. What we call a dollar is not even a dollar, but a Federal Reserve Note, a promissory note issued by our central bank, promising to pay us, not a dollar, but another note. Look at the legend on the bills in your wallet. You won’t see anything that makes any sense. That’s because our currency is just a circular liability that can never be liquidated or redeemed. It costs virtually nothing to produce Federal Reserve Notes, and there is no limit on their production. From the standpoint of the government, this green paper is even better than brown glass.

How do I know the system will fail? Because that’s what history teaches. There’s nothing new about a monetary system in which a government overrides the market and substitutes something easier to produce than real money. Such a system has a name — “fiat” — and it’s been adopted on many occasions within the last 300 years. Each and every time it has failed. It’s from this dismal record that I conclude ours too will fail.

Know Your Fiats

There are four main historical examples of fiat money among the major nations.

The first was the Mississippi System. This was the strangest, and the most original. Following the death of the free-spending Louis XIV in 1715, France was broke. [That’s Freedomland, for any government employees out there.] A Scottish gambler and amateur economist named John Law gained the confidence of the Regent, who was the man in charge following the transfer of the crown to a minor.

Law was given an opportunity to put in practice his theory that gold and silver were too scarce and inelastic to serve as money. He proposed instead that France adopt a monetary system using paper as the medium of exchange. Paper that was not redeemable or convertible into anything else. This, he assured the Regent, would get the country moving again, and pave the way to a new prosperity. Law was authorized to set up a central bank whose notes circulated as money, and a holding company whose shares traded at values inflated by the new paper money.

His newly created Banque Royale issued 2.7 billion livres in banknotes in the space of two years. His newly created Mississippi Company achieved a market capitalization of 5 billion livres over the same period. This resulted in a massive stock market bubble. Following a parabolic blowoff, the bubble collapsed, the bank failed and Law fled the country, leaving destitution in his wake.10

You’re looking at a contemporary scatological rendering of John Law making fiat money. You can see him up on the platform there being fed hard money and then passing paper money out the other end.

The second episode was the case of the Continental Congress. This is the most sympathetic of the four. Meeting in May 1775 following the outbreak of hostilities at Lexington and Concord, Congress had a war to finance and no clear way to do so.

It could not levy taxes because its authority was unclear. Both the British Crown and the individual states claimed the power to tax, and anyway, a brand new tax would not have gone down well in the context of a rebellion that was largely about taxes.

A loan was also out of the question, since a lender would have been crazy to take the risk of funding a ragtag band of colonial rebels at the outset of their rebellion. So Congress did what it had to do, and printed up the money.

Over the next five years, until they stopped the presses in 1780, Congress issued about $241 million face amount of irredeemable, non-convertible paper bills known as “Continentals.”11 The bills served their purpose, keeping the armies in the field, but how they functioned in practice is described in the following passage12:

A barber wallpapered his shop with Continentals. An old soldier, wounded in the leg, used a bundle of his pay as a bandage, and coined the word “shinplaster,” which was later used to describe any sort of money that could not be redeemed. A ship’s crew discharged in Boston, and paid off in now worthless currency, found a way of making suits out of the paper bills and paraded through the streets. “For two or three years we constantly saw and were informed of creditors running away from their debtors, and the debtors pursuing them in triumph, and paying them without mercy,” wrote [a contemporary observer].

The third episode was the fiat money of Revolutionary France. This was the most chilling of the four, intertwined as it was with the Reign of Terror. In 1789, France was broke once again, with a heavy debt and a serious deficit. With the memory of John Law still fresh, the Jacobins set about their experiment with great caution and solemnity. They promised themselves they would limit the emission of paper, called assignats, to 400 million, come what may. They over-collateralized the paper with the extensive and valuable lands of the church that had been seized in the name of the people. They put bells and whistles on the paper to distinguish it from the plain paper used in Law’s Bubble, and to signify that it was tightly controlled. They persuaded themselves that the evils of the earlier debacle stemmed from the fact that Law’s paper was the issue of a corrupt monarchy operating in secret. This time would be different; after all, it was now the virtuous people operating in the open. Wrong.

By the morning of February 18, 1796, when all the machinery, plates and paper for printing the hated paper money were finally broken and burned in the Place Vendome, a total of 45 billion had been issued.13 Here we see one of the revolutionary kingpins, Marat, as depicted shortly after his assassination by Charlotte Corday.

The fourth episode was the German inflation following the defeat of Imperial Germany in World War I. This is probably the most famous of the four. Everyone’s heard stories of wheelbarrows filled with paper money needed to buy a loaf of bread, wage payments made twice daily to keep up with the inflation, etc. It started with Germany’s defeat in the war. Germany was an economic basketcase. It had counted on winning, and paying for the war with booty. It had bled its population white and stuffed its central bank with government paper. To make matters worse, the victors imposed heavy reparations through the infamous Treaty of Versailles.

After handing over its merchant marine, its rolling stock, its flocks and herds, as well as a large portion of its gold reserves, Germany turned to printing new marks and selling them in the foreign exchange market for whatever they would bring.14

[Source:Golden Sextant archives]

Before the War, the mark had an exchange value of about 24 cents. When postwar trade started up in the summer of 1919, the mark fetched 8 cents.15 Four and a half years later the currency was replaced by a new rentenmark, which had a value of about 24 cents. The conversion rate was 1 trillion old marks for each rentenmark.

Now, despite their obvious differences, these episodes had several important features in common. To begin with, it’s worth noting that in each case the fateful errors were made by talented and well-educated people. They were their countries’ best and brightest financial minds. This includes John Law, by the way, who’s gotten very bad, and I think, unfair, press ever since. These men did not take the road to ruin frivolously, but rather as a measured response to a set of exigent circumstances. The point is that governments are simply incapable of managing a money supply. The pressures and temptations always prove too great.

Economically, each episode began with good intentions and admirable restraint. Business picked up. Soon, however, the cost-free money began to act like a drug. More and more was demanded, more and more was supplied. Ultimately, the authorities completely lost control over the quantities of fiat money they produced. Each episode ended in what Von Mises called a “crack-up boom.” This is the manic phase in which a tipping point is reached in popular perception. People finally realize that the paper money is no good, and they move out of it, as quickly as they can, into something more durable. While business is feverishly brisk, the turnover actually signifies that commercial activity has become a giant game of Old Maid. The boom ends in a sudden collapse, and the final repudiation of the currency. At the end of the day, as Voltaire observed back in 1729, “Paper money eventually goes down to its intrinsic value — zero.” In each case, gold and sometimes silver made a quiet return as the only thing people were willing to accept as money. In the case of the French and American episodes, this involved a return to a familiar form of hard money. In the case of Germany, it involved the introduction of a brand new gold- backed currency under the provisions of the Dawes Plan of 1924.

Politically, each episode featured several common elements. Fiat currency is, after all, a political phenomenon — people with political power decide to compel other people to accept their paper as a medium of exchange. As Lenin famously observed, all politics boils down to the question, “kto kovo”; “who whom.” Somebody wins, somebody loses. The winners are the clever fellows who figure out how to scam the system, go with the flow. Speculators and debtors win big, at least until the music stops. Ordinary folks, that is, people without political connections, take the hit. In the case of Revolutionary France, the working class was the primary victim, as wages were held constant throughout the horrific inflation. The misery and distress this occasioned provided plenty of cannon fodder for the Revolutionary armies. In the case of Weimar Germany, the middle class was basically wiped out at the expense of the big industrialists. This was not a healthy development, as subsequent events would show.

Socially, each episode had a poisonous effect. The essence of capitalism is an orientation toward the future. People work and save today so that they may live better tomorrow. Fiat money inflation makes this a mug’s game. It results in what Andrew Dickson White, the founder of Cornell University and the author of a brilliant analysis of the experience in Revolutionary France, called the “obliteration of thrift.”16 Savers are chumps. The smart guys are those who spend it all and go into debt to consume, the more conspicuously the better. Moreover, fiat money always results in massive corruption. The new pools of paper-based wealth are never shy about buying protection for their privileges.

Which brings us at long last to our own experiment in fiat money, the biggest and boldest of them all. As a technical matter, we went into full fiat mode on the afternoon of August 15, 1971. This was the day on which President Richard Nixon severed the last thin link between the US dollar and gold.

He did this by suspending the convertibility of the dollar into gold as required under a set of postwar monetary agreements known as Bretton Woods. A little background is in order for those of us who don’t read monetary history for fun.

Bretton Woods had been adopted toward the end of the Second World War. Its main architect was our old friend, the economist from hell, John Maynard Keynes. See if you can spot him here. Bretton Woods was another gold exchange standard, similar to the one adopted after World War I, except this time the dollar was the sole reserve currency. The pound, also a reserve currency under the old system, was now toast. Bretton Woods was a great deal for the United States.

[Source: National Archives]

It enabled us, alone among the nations, to have our cake and eat it too. It conferred on us what critics, mainly French [some things never change] correctly called an “exorbitant privilege.” It licensed us literally to print up the world’s reserve currency. The only catch was we had to agree to redeem dollars for gold at a set price, $35 per ounce. But not just any dollars. Only dollars presented for redemption by foreign central banks. American citizens were still barred by law from owning gold under an earlier decree of President Roosevelt.

The Bretton Woods system worked for a while. But around the time of the Cuban Missile Crisis in 1961, the market began to act up.

It so happened that the market clearing price for gold was at that time actually somewhat north of $35. Now, the monetary authorities had three choices. They could tighten monetary policy, to make the dollar more valuable relative to gold. They could devalue the dollar against gold. Or, they could engage in a costly and futile attempt to hold down the dollar price of gold through market intervention.

Everybody out of the Pool

So what do you think they did? That’s right, they did what they always do in such circumstances: they intervened. Massively. They organized something known as the London Gold Pool, which operated from November 1961 to March 1968. The Gold Pool was a price suppression scheme operated by the Bank of England at the behest of the United States. It fed gold supplied by the US and seven European countries into the London bullion market. The seven became six after France pulled out in 1967 and moved conspicuously to the buy side.

[Source: www.canoe.ca]

The Gold Pool was a costly failure. On its final day of operation alone, the Pool participants lost 400 metric tons of gold.17

The market ultimately forced the authorities to establish a two-tier system under which gold had both an official price, $35, and a market price, which was generally in the $40 range. By August 1971, when President Nixon finally pulled the plug, we were suffering a hemorrhage of gold. We had been pursuing a guns and butter policy for a long time, fighting a costly war in Viet Nam and enacting a number of expensive domestic entitlement programs. We had a substantial amount of inflation in the system, which the French and others had duly noted. The official price of $35 per ounce was absurd and couldn’t last.

You Have to Give Us Credit

Thirty years on, there are a number of striking similarities between our own adventure in fiat money, and its historical antecedents. For the most part, they’re obvious, and I won’t dwell on them: the winners and losers, the rise of the speculators, the rise of the debtors, the obliteration of thrift, the corruption. Read any newspaper, and you see that the nature of the excesses and distortions is pretty much the same.

But the scope and scale are on a different plane altogether. Our scope is global. Each of the prior examples was limited to a particular nation state. Our fiat money is the whole world’s problem. US dollar assets still account for about 75% of the monetary reserves of the world’s central banks.

And our scale beggars the imagination.

Sorry to interrupt your right brain reverie.

This chart shows graphically how even modern governments can’t manage a money supply.

It begins in 1959, just before the London Gold Pool got started. It ends at yearend 2002. Things have not improved since. The chart tracks the growth in our money supply, and our debt limits, on the right hand scale. Those are trillions of dollars. The light blue line is M3, the yellow is M2, the greenish blue line at the bottom is M1. The debt limit ceiling is shown in the blue stairstep line.

The technical term for this explosion in monetary aggregates is “nightmare.” The really sobering aspect of this is that it actually understates the money supply. The authorities have literally lost track of what money is. In Congressional testimony on February 17, 2000, Fed Chairman Alan Greenspan had a revealing exchange with Representative Ron Paul. See Definitions of Money in Congress: Webster vs. Greenspan. Mr. Paul asked Chairman Greenspan what he considered the best tool to measure the money supply. The Chairman admitted that he was at a loss to pick such a tool. Mr. Paul asked him:

“So it’s hard to manage something you can’t define?” And the Chairman answered:

“It is not possible to manage something you can’t define.”

As our chart shows, the Chairman wasn’t kidding.

The chart also tracks the gold price on the left hand scale. You can see how it started off at $35 back in 1971 in the last days of Bretton Woods. Gold had a fine romp in the late 70’s. You can also see there in the mid 90’s the footprint of the so-called “strong dollar policy,” or “weak gold policy,” as gold bugs put it. This policy featured covert intervention, a sort of “son of London Gold Pool,” that once again held down the gold price as our financial asset bubbles grew unchecked. But that’s a topic for another day.

Bad Moon Rising

Now, we don’t know exactly when the collapse will occur. This episode has already lasted a lot longer than it should have, much longer than any of its fellows. There are a number of reasons for this. One is the unique position of the United States as protector of the West during the Cold War. Another has been the absence of a plausible alternative reserve currency. Another is the massive and continuing interventions by a state that is more powerful than any that has come before. Another is China, which has supported the dollar in order to increase its exports. Still another is the fact that our biggest creditors have had a huge stake in postponing a collapse. With total debt of some $31 trillion on a GDP of $10 trillion, and combined annual deficits approaching $1 trillion, we may be too broke to go on as we are, but we’re also too big to fail.

However, signs of terminal stress abound.

Recent comments by Fed officials suggest we may be about to launch into crack-up overdrive. Fed Chairman Greenspan assured Congress back in November that deflation is not a risk. Quoth the Chairman: “There is virtually no meaningful limit to what we could inject were that necessary.”

This comment was famously echoed by Fed governor Ben S. Bernanke, a good Princeton man, about a week later. Addressing the National Economists Club in Washington in November of last year, he said (“Deflation: Making Sure ‘It’ Doesn’t Happen Here”):

Like gold, US dollars have value only to the extent that they are strictly limited in supply. [Note the irony.] But the US government has a technology, called a printing press (or today, its electronic equivalent) that allows it to produce as many US dollars as it wishes at essentially no cost. By increasing the number of US dollars in circulation, or even by credibly threatening to do so, the US government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

Indeed.

When it comes, the final collapse will be a sudden breakdown, what we call today a non-linear event. It will also, in all likelihood, take everything else down with it.

After the Storm

[Source: www.posterphoto.com]

There. Back to the right brain. The third and final proposition is that gold will rise again. That seems a stretch, doesn’t it?

Even if I’m right and our fiat system does fail, why won’t it just be replaced by some other fiat system? Because the market won’t allow it. When the system collapses, the monetary authorities will be on the defensive. Having lost the confidence of the market, they won’t be able to get it back with more of the same. They will have to do what everyone in their position has done before them. They will have to show us the money. Real money. Money that’s an asset, not a promise. It will be at least another generation or two before a government can get away with another monetary swindle.

Now, I grant you that it seems incredible, sitting here today, that a population that has been systematically miseducated to despise precious metals will demand that they return to the center of financial life. But when the confidence goes, history teaches that’s just what will happen. We will relearn some very hard lessons. Gold will return to its historic role as the anchor for the Western monetary system, not because officials welcome it, but because the market will force their hand.

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Montana Governor Brian Schweitzer has signed into law House bill # 246 known as Montana Firearms Freedom Act I encourage everyone to click the above link and read the bill for yourself, it is a short read and without all the legal BS that usually accompanies legislation.

In my eyes, I see no chance of reforming the behemoth that is our Federal Government. We are far past the point of trimming down spending we need to, like Ron Paul says, eliminate entire Departments of the Federal Government. Laws of this nature are the SOLE hope that I see for our nations future. Utah is looking into similar legislation as is Tennessee. I hope that you will spread the word of these bills around to everyone you know and take the time to write the sponsors of these bills and thank them for their common sense approach to politics.

Undoubtedly this story is far from over, the last time a group of States got together and decided to use their Constitutional rights the power hungry Federal Government decided ignore the Constitution, murdering men women and children in the process. (You think it was different in the 1860’s? Read this.)

History repeats itself time after time, in 1776 we successfully threw off the chains of tyranny, in 1860 we fought valiantly against another oppressive Federal government, now once again it is time for the tree of Liberty to be watered.